Berkeley Group has reconfirmed its guidance for the current financial year, maintaining an expected pre-tax profit of roughly a3450 million and projecting a similar profit level for fiscal 2027. The developer also reiterated its target of a net cash position of around a3300 million by the end of the year.
Management said trading conditions have remained constrained since November. It attributed the softness to recent geopolitical developments and general macroeconomic uncertainty, which have combined to dent consumer confidence in the UK housing market.
Despite these near-term headwinds, the company reported that sales enquiries continue to be robust. The value of its underlying reservations has been recovering toward levels that were seen last summer, prior to the slowdown that occurred ahead of Britains autumn budget.
The group highlighted the emerging situation in the Middle East as a material influence on market sentiment. Management warned that the situation could pose additional risks, including the potential for higher inflation and for interest rates to remain elevated for longer than markets might currently expect.
Looking past the immediate disruption, Berkeley said it remains constructive on the long-term fundamentals of London, citing the citys status as Europes largest financial centre and a significant hub for technology companies.
To protect margins and improve project viability, the company is reviewing planning consents across its development pipeline so that sites can be moved into production more effectively. The business also said it will continue to expand its build-to-rent activities through its Berkeley Living platform.
Berkeley noted that the Gateway 2 approval mechanism overseen by the Building Safety Regulator has complicated and slowed the supply of new homes in London and other urban areas. Management added that there has nevertheless been some forward movement on approvals in recent months.
Since reporting interim results, the group has repurchased a359 million of stock, taking the total returned to shareholders in the current financial year to a3191 million. Cumulative returns since the rollout of the companys "Berkeley 2035" strategy in December 2024 now stand at a3330 million.
Beyond 2027, Berkeley said its priorities will be cash generation, maintaining a strong balance sheet and delivering shareholder returns. The company will also look to optimise its land holdings and further grow its build-to-rent business.
Summary
Berkeley remains committed to an approximate a3450 million pre-tax profit for the current year and a similar outcome for 2027, while targeting about a3300 million net cash by year-end. Trading has been challenged since November by geopolitical tensions and macro uncertainty, though enquiries and reservation values have been improving toward summer levels. The group is reviewing planning consents to restore margins, investing in build-to-rent, and returning capital to shareholders through buybacks.
Key points
- Pre-tax profit guidance of about a3450 million for the current financial year; similar outlook for fiscal 2027.
- Target net cash position of around a3300 million by the year-end; a359 million returned to shareholders since interim results, a3191 million this financial year, and a3330 million since December 2024 strategy launch.
- Continued investment in the Berkeley Living build-to-rent platform and active review of planning consents to improve project viability and margins.
Risks and uncertainties
- Geopolitical developments, including tensions in the Middle East, are weighing on buyer sentiment and could drive higher inflation - affecting construction costs and mortgage markets.
- Prolonged macroeconomic uncertainty could keep interest rates elevated, further reducing affordability and suppressing demand in the housing sector.
- Regulatory processes such as the Gateway 2 approval route under the Building Safety Regulator have slowed new housing supply; renewed delays could impact project timelines and revenue recognition.